It gets you used to creating a powerful movement often. Increases work capacity. Also increases power (quick strong moves).
it's the best exercise for explosive power. you are working your whole body at a very high intensity.
Back in the old days Jack Dempsey would chop a couple cords of wood. Hitting the tire is just a modern variation of old fashioned boxing training. Try it sometime and you will find out how difficult it really is. You will notice that Taylor is using gloves. This is not recommended practise as it will inhibit thickening of the skin. If he wants to have the delicate hands of a surgeon, Taylor shouldn't be in boxing.
You also use your muscles in unison, like in a punch.. When I do it i try to use my hips, abs, back, and arms.. (I think thats how it should be done anyway right?)
Well, Pavlik does it in training; so I guess Taylor is going with the reasoning of "if you can't beat them, join them".
It supposed to be like chopping wood. Lots of the power punsher such as Forman used to chop wood for exercise. I think wood chopping might be better because you have to go all out with each strok or else you won't split the logs. With the Tire you could theoretically just lift the hammer and swing lazily.
Very good exercize that a lot of power punchers use to increase stamina and explosiveness. The guy in my avatar, Valeri Popenchenko, used to chop wook every break between lectures when he was at the naval academy, and he wasn't called Mr. Knockout for nothing.